In McQueen v. True Partners Consulting, LLC, the Superior Court held that former employees whose employment agreements had expired were not “employees” under the Wage Act, and therefore could not recover damages for “wages” allegedly earned after their termination.  In so deciding, the Superior Court affirmed that wages no longer accrue in the absence of an employment relationship and are not subject to recovery under the Wage Act.

True Partners Consulting, LLC hired Thomas McQueen and Joel Gross as Managing Directors in May 2007.  When hired, each signed an employment agreement with True Partners.  On January 19, 2009, True Partners informed McQueen and Gross that they had to either sign a new employment contract or sign a separation agreement.  McQueen and Gross requested a separation agreement but did not sign it.  In the absence of a new agreement and pursuant to the prior employment agreement, on January 31, 2009, True Partners terminated their employment.  Nevertheless, McQueen and Gross continued to perform work for True Partners during the month of February, which resulted in a $9,850 reduction in a credit balance for the company.

Because True Partners only paid McQueen and Gross for work performed through January, they filed suit to recover the “wages” allegedly earned after their terminations, alleging a violation of the Wage Act and a plethora of common law claims.  True Partners filed a motion for summary judgment on all claims.

The Court granted True Partners’ motion for summary judgment with regard to the Wage Act claims.  The Wage Act requires employers to pay terminated employees all wages earned in full on the day of discharge and subjects offending employers to a myriad of damages, including treble damages and attorneys fees.  The Court based its decision on the fact that both McQueen and Gross had conceded that they were terminated on January 31, 2009 and failed to provide evidence to show that the parties created any other employment contract.  Because they could not establish that they were “employees” under the Act, the Court found that they could not be owed “wages.”

Despite foreclosing recovery under the Wage Act, the Court found that True Partners could be liable for the post-termination “labor and services” under an unjust enrichment theory, since the efforts of McQueen and Gross had conferred a $9,850 on True Partners.

This decision limits the application of the Wage Act to wages earned prior to discharge, even if the employee continues to provide labor and services to the employer, and cuts off recovery under the Act at the point the employment relationship is severed.  Nevertheless, employers must be cautious, as plaintiffs may seek to recover damages for work performed after discharge under other legal theories.